How to know if you're ready to buy a franchise

Hey folks,

I’m running a short three-part series walking through the whole franchise-buying process. 

Today: the 3 questions to answer before you start searching. 

Next, we’ll walk through vetting and due diligence, then finally “discovery day” to closing the deal.

I’ve written deeper dives on a lot of these topics, so I’ll link them throughout.

Let’s start at the beginning.

Are you ready to work?

I talk to a lot of people who want to buy a franchise.

And sometimes, I can tell in the first 10 minutes that they absolutely shouldn’t buy a franchise. 

Not because they're not smart or capable. But because their expectations are completely misaligned with reality.

Here's the most common red flag:

"I want passive income."

If that's your primary goal, you're not ready. Because small business ownership, franchise or not, is the opposite of passive. Especially in the early days.

I think of it like a slingshot. You aim where you want to go in the long term. But you’ve got to take a few steps backwards first. 

The first 12–24 months will be chaotic. You're learning systems, hiring people, fixing problems, and probably working more than you did in your corporate job.

But if you do it right, you build something that eventually can give you more freedom, more income, and more optionality.

The question is: Are you ready for that?

If you are… here are the first three steps to buying a franchise.

Step 1: Define your why

This might sound touchy-feely, but it's critical. 

You need to get clear on why you want to own a business. What do you want in your life? Your answers will shape what business you’re searching for. 

Some questions worth asking yourself:

Do you want to build something you can sell in 5–10 years? Look for something highly sellable.

Do you want to step into an executive role and delegate the day-to-day? Look for something that scales well.

Do you want to build a multi-unit empire? Geography will be key.

This is a big question that shapes everything that comes next. Take your time with this question.

→ Related read: W2 vs Franchise: are you ready?

Step 2: Get clear on your capital

Once you know your why, the next question is: How much are you willing to invest?

This is where a lot of people waste time. They spend weeks looking at opportunities that aren't financially viable for them.

So let's nail this down early.

Two things to figure out:

1. Your total investment size

How much are you comfortable putting into a business? This includes franchise fees, build-out costs, working capital, everything.

Some franchises require $100K all-in. Others require $500K+. You need to know your number.

→ Related: How much does a franchise actually cost?

2. How you're going to fund it

If you’ve got the cash, great. No debt, no pressure on cash flow, derisk yourself. 

But if you don’t, there are other options: 

• SBA loan – A loan partially backed by the government. Typically requires 15–20% down.

• ROBS (Rollover for Business Startups) – A way to invest your retirement funds into your business without penalties or taxes.

If you don't know your funding plan, don’t start looking at franchises yet. 

Because the second you start raising your hand to franchisors, you're entering a sales process… and you need to be able to move quickly when you find the right fit.

→ Related read: How to fund a franchise (and not go broke)

Step 3: Use a framework to filter your options

Here's the problem: there are over 4,000 franchise brands in America.

If you just start browsing, you'll get overwhelmed, distracted, or both.

So start with a list of criteria you’re looking for. Then, you have a quick way to check if a business ticks your boxes. 

Here’s my “GROCE” criteria framework (easy to remember, if your last name is also Groce):

G – Geography

Where do you want to open the business? Different markets suit different businesses. 

A B2B waste management franchise thrives in an industrial area. A high-end home services brand needs affluent suburbs. (And don’t forget to check territory availability.)

R – Revenue model

High-ticket projects, recurring monthly services, retail transactions… your skillset and mindset need to align with the revenue model. 

If you're great at relationship-building and long sales cycles, a high-ticket model might be perfect. If you love systems and predictability, recurring revenue might be better.

→ Related read: Is this franchise a good fit for me?

O – Operations

How does the business actually run day-to-day? Is it brick-and-mortar or non-brick-and-mortar? Do you need employees or can you use subcontractors?

The operational model determines how hands-on you'll need to be—and how quickly you can scale.

C – Capital (we already covered this)

Your total investment and funding plan.

E – Expansion goals

Do you want to own one unit, or do you want to build an empire?

If your goal is multi-unit ownership, you need a business that supports that. Some franchises are designed for single-unit operators. Others are built for portfolio growth. Your expansion goals should shape your decision from day one.

→ Related read: Should I buy one unit or multiple?

Wrapping up

That’s plenty for one article, so let’s recap. Before you look at a single franchise, you need…

1. Clarity on your why – What do you want business ownership to do for your life?

2. A capital plan – How much can you invest, and how will you fund it?

3. A filtering framework – A systematic way to narrow 4,000+ options down to a shortlist.

Once you have these locked down, you can move fast. 

In the next article, I'll walk through how to actually vet a franchise. What to look for in the FDD, how to talk to franchisees, and what questions actually matter.

In the meantime, if you're ready to start your search and want help with this process, book a free strategy call. We'll figure out where you're at and what makes sense for you.

Connor

P.S. If you're not ready yet, that's totally fine. Keep following along. When the time comes, you'll know exactly what to do.

Ready for the next step? Here are 3 ways I can help you: